In the past, we've heard Alphabet's Google unit describe itself as an "AI-first company," as well as emphasize the importance of artificial intelligence and machine learning in the products that Google makes. At a workshop on AI and the Future of Work earlier this month, Alphabet Executive Chairman Eric Schmidt discussed where such technologies are heading, as well as their impact on jobs, income inequality, and American competitiveness.

Schmidt said he has been following AI since the 1970s, but said that until recently he had been pretty skeptical of the field, though he noted that Alphabet CEO Larry Page studied AI at Stanford. Still, Schmidt said, when deep learning came out, it quickly became very beneficial to the firm's advertising systems. The big change, he said, was "unsupervised learning" in 2012, when a system watching YouTube discovered the concept of a cat. The team which developed that system became the basis of Google Brain, and has since grown into a large team at work on these technologies.

Going forward, Schmidt said, he finds it encouraging that we are beginning to see top students choosing to study AI, computer science, and machine learning. He noted that deep learning is "still a black art," because we don't really understand how it works and how it fails, so we can't put it to work in life-critical situations.

Schmidt noted that though people talk about how it took DeepMind only seven days to be able to play Go better than humans, it took two years to build the algorithm to make it happen. He talked about Google's efforts with AutoML to generalize the building of AI systems, and said that real systems that people rely on will need to be engineered and thought through holistically. He said he's also encouraged that we will see another factor of 10 or 100 growth in computational power, and a vast expansion in the network and database of knowledge.

Schmidt doesn't think developing common sense is the main goal with AI, and that getting to judgment will take a long time, but he does believe that we'll eventually get there. He said there is currently a project at DeepMind to try to advance general intelligence at a research level, but that the vast majority of work is specialized, and that such specialized efforts aim for the low-hanging fruit. Lastly, he was particularly bullish as to the potential impact of AI on health care.

Asked by conference host and MIT CSAIL Director Daniela Rus about the rapid pace of change in the industry, Schmidt noted that "we always complain about things changing so quickly." In the early 1900s, people had to cope with the introduction of the automobile, electricity, and airplanes, as well as world historical events like World War I. We've been through bigger changes, he said, it's just that today "we're complaining more."

On the question of AI and jobs, Schmidt said that "every wave of technology has had this conversation." He noted that we've seen lots of mechanization in factories in the Midwest, and yet today those areas support more jobs and have better economic growth than they did 20 years ago. We are not replacing jobs, but rather replacing tasks, he argued, and said we can't imagine the jobs that AI will create.

Actually, because of demographic changes and declining populations in many countries, we're more likely to have a surplus of jobs and not enough people to fill them, he said. For example, he talked about how the population of China is expected to peak in 2031, while population has already peaked in Japan and Korea, so these countries are rushing to automate.

Schmidt discussed the different avenues countries are pursuing to deal with these changes. The US has a "very flexible" model, he said, but China has a different perspective. "We need to get our act together and embrace this," he said, and his suggestions include additional funding for universities and keeping international PhD students in the country instead of kicking them out. "We're hurting ourselves" in the battle against China and Russia for AI, he said.

Schmidt argued for more "inclusive innovation," which is the title of an MIT-held competition that attracts ideas for startups from around the world. He said technical groups often focus on a narrow problem, but instead what we need is a more general application of technology to make people happier and smarter. "Making everyone smarter is a net economic gain for the society," he said.

Schmidt mentioned a Google project to donate $1 billion over 5 years to efforts in education and retraining, but said that, in general, "governments are not doing enough" to prepare people for the changes that are coming. He also promoted new forms of digital learning, such as edX.

Asked about inequality, he said globalization does lead to increased inequality, but said he isn't sure whether or not technologies that improve education will also increase inequality. Though today there is a strong correlation between income and education, he wonders if that will break down at some point.

Historically speaking, the 40-hour work week is a new idea, Schmidt said, and if we get more productivity through automation, people may work fewer hours for the same compensation. But he noted that work provides an identity to most people, and that identity is very important, so we need to reimagine what the future of employment looks like.

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